The New Zealand dollar ended today pretty much where it finished yesterday after taking a brief dip below US62c in overnight trading.
After featureless trading today it was buying US62.15c at 5pm compared with US62.28c at yesterday's close to complete its fourth straight weekly gain.
The market is bracing for a toughly worded Reserve Bank statement on Thursday which is expected to keep the kiwi dollar well underpinned.
Although the bank is not expected to hike interest rates again, despite inflation running at an annualised 6 per cent in the last quarter, governor Alan Bollard is tipped to reiterate comments that he sees no scope for easing.
Dr Bollard on June 8 said he didn't expect to raise interest rates again this cycle, because slowing economic growth would curb inflation pressures in the medium term. He forecast the economy would grow 1.5 per cent in 2006, the slowest pace in seven years.
ANZ bank said pressure will come on the kiwi next month from domestic data that is expected to turn ugly, at the same time as rate rises are on the cards in the US, Europe and Australia.
Influential US Bank Lehman Brothers today recommended investors sell New Zealand dollars along with Canadian dollars, according to Bloomberg News.
"The Canadian dollar is very sensitive to the outlook for the US economy and New Zealand is one of the most sensitive economies to a slowdown in global growth," said Charles Shioleno, a New York-based currency strategist with Lehman.
Slower growth in the US would hurt the economies of the two countries.
New Zealand's economy is not strong enough to support its high level of interest rates, Lehman said.
"Either you believe the central bank is going to raise rates, or you think they're going to cut rates, which is more likely," Mr Shioleno said. "We don't see any interest rate support for the currency."
The kiwi slipped against the Australian currency and the euro to be buying A82.90c from A83.09c, and 0.4915 euro from 0.4940. The trade-weighted index closed on 62.61 from 62.80.
The US dollar dipped after minutes from the Federal Reserve's last policy meeting further cooled expectations that the central bank will raise interest rates for an 18th straight time next month.
"The dollar is unlikely to rise much from here as expectations for an August rate hike have come down quite a bit," said a trader at a Japanese bank.
The US dollar had surged to three-month highs against the euro and the yen earlier this week as data showing rises in producer and core consumer prices in June supported the view that the Fed would bump up the funds rate again to fight inflation.
The euro rose to US$1.2645 from around US$1.2630, well above a three-month low of US$1.2456 also hit on Wednesday.
The following are Reuters currency rates:
5pm today 5pm Thursday
NZ dlr/US dlr US62.15c US62.28c
NZ dlr/Aust dlr A82.90c A83.09c
NZ dlr/euro 0.4915 0.4940
NZ dlr/yen 72.60 72.70
NZ dlr/stg 33.61p 33.76p
NZ TWI 62.61 62.80
Australian dollar US74.96c US75.00c
Euro/US dollar US1.2647 US1.2606
US dollar/yen 116.81 116.72
- NZPA
<i>Currency:</i> Kiwi cruises to steady finish to week
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